An estimated 22% of the world’s largest firms are now effectively under state control, this is the highest percentage in decades. These firms are likely to remain a prominent feature of the global marketplace in the near future. The upsurge of state-owned enterprises (SOEs) as global competitors has given rise to concerns related to a level playing field. Some business competitors and observers claim that preferential treatment granted by governments to SOEs in return for public policy obligations carried out at home can give SOEs a competitive edge in their foreign expansion. The OECD has taken a multidisciplinary approach, looking at the issue from the competition, investment, corporate governance and trade policy perspectives. The report aims to sort fact from fiction, and develop a stronger understanding, based on empirical evidence, on how to address growing policy concerns with regard to SOE internationalisation. The report concludes that although there is no clear evidence of systematic abusive behaviour by SOE investors, frictions need to be addressed, in view of keeping the global economy open to trade and investment.

Governments acting as the owners of enterprises engaging in cross-border trade and investment face a number of issues regarding their ownership and governance structure. This chapter covers the main areas of concern for the government as an owner; and concerns for regulators and policy makers in foreign jurisdictions. It points to examples of the actions taken, at the national as well as international level, to address some of the concerns. These include adhering to codes of corporate governance and competitive neutrality arrangements. The chapter also extensively covers provisions of the OECD Guidelines on Corporate Governance of State-Owned Enterprises that are applicable to SOEs operating across borders. The Guidelines promote the clarification of SOE objectives; sound regulation and governance practices; the independence and autonomy of SOEs; and better monitoring through strengthened transparency and disclosure, as priority areas to focus on.